2017, Volume 70 - Issue 1
RSS feed citation: At RePEc
Publication date: 01 February 2017
THE RELATIONSHIP BETWEEN SAVINGS AND ECONOMIC GROWTH AT THE DISAGGREGATED LEVELRead the article
MONETARY POLICY TRANSMISSION OVER THE REAL SECTOR OF BANGLADESH ECONOMY: AN SVAR APPROACHRead the article
REMITTANCES AND FOREIGN AID AS SOURCES OF EXTERNAL DEVELOPMENT FINANCE: IMPACTS ON SAVINGS AND INVESTMENT IN POST-WAR LEBANONRead the article
THE DYNAMIC CAUSAL LINKAGE BETWEEN FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM ETHIOPIARead the article
Bassam HAMDAR, Faculty of Business and Economics, Department of Economics. American University of Science and Technology, Beirut, Lebanon
Samer NOUAYHID, Price Water House Coopers (PWC), Middle East Region, United Arab Emirates
The on-going debate on the effectiveness of Foreign aid and Remittances in stimulating savings and investment has been inconclusive. The literature shows that the effects of these two sources of external development finance differ across nations. One country that the literature failed to examine was Lebanon. This remittance-dependent country which ranked 7th in the 2009 list of top remittance receiving countries in the world (as a percent of GDP), has also received significant flows of aid and is still suffering from a huge debt burden which makes it an ideal case for study. By applying a classical multivariate linear regression model for savings and a multivariate distributed lag model for investment for the post-civil war period, the results showed that the huge flows of remittances to Lebanon, which dwarf those of aid, exert a positive influence on both savings and investment while aid, the more volatile source of foreign capital, has a negative effect on savings and a positive effect on investment, irrespective of the poor political-economy environment in the country. Despite the fact that remittances may be considered a better source of development finance, those two foreign inflows can be seen as complements rather than substitutes.
E21, E22, F21
Remittances, Foreign Aid, Savings, Investment, Lebanon
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